BOI responds to The Nation article

The Board of Investment (BOI) has written a lengthy response to a news article titled ‘Abans takes BOI to court’ and a comment titled ‘Land grabbing yahapaalana style’ published in The Nation of May 31, 2015. The BOI sent this response late on Friday, June 5, (the day we go to print) and moreover the response was of a length that could not be accommodated. However, in response to these difficulties, the BOI has now sent us a shortened version of the reply to be published in this week’s print edition.

Letter to the Editor:
Dear Sir,
We refer to the articles “Abans takes BOI to Court” and “Land grabbing – Yahapalanaya Style” dated 1/6/2015 which features a completely inaccurate account of a recent action of the Board of Investment of Sri Lanka relating to the recovery of an unutilized BOI land in Seeduwa.

However, the published article has merely been based on a one sided version without finding the veracity of the chain of facts connected to the matter. Hitherto, the BOI policy has been to ensure that the lands allocated for investment projects are utilized for the purposes set out in the project application. Therefore, this is not in any way a discriminatory action targeting a specific company.

The land in question consists of approximately 18 acres and which was previously allocated to another investor to build 1210 housing units, but the agreement was terminated/cancelled by the BOI due to non implementation of the project. Thereafter, the land was allocated to Crown City Developers (Pvt) Ltd. for a project to construct 100 housing units on 4th May 2000. However, there were changes in the scope of the project on four occasions as well as four extensions granted due to delays in project implementation. The BOI has over the years accommodated Crown City Developers (Pvt) Ltd. and permitted them to change the nature of the initial project to include warehouses, a hypermarket, shopping mall and a logistics center. As a result, the project implementation period was extended by the BOI during the period of 2004 to 2013. Accordingly, the BOI facilitated the signing of six supplementary agreements during the period of 2004 to 2014 to accommodate their change of scopes and extension of project implementation period.

However, the company has used only 10 acres out of the total land extent of approximately eighteen acres awarded to them only to build a warehouse and a logistic center. The balance land remained unutilized and the BOI has been requesting the Company to return the same since 2009 to recover this land and to grant it to a prospective investor. On 18th December 2009, BOI urged to release the unutilized portion of the land at Kadolkelewatte to the BOI to enable the Legal Department of BOI to make arrangements to sign the Supplementary Agreement as per several discussions Crown City Developers (Pvt) Ltd. stating that they are not agreeable to release a portion of the land back to the BOI as they intend to expand their project in the near future.
On 9th March 2010 the Legal Department of BOI responded stating that the signing of the Supplementary Agreement could be arranged only after releasing of the unutilized portion of the land leased to Crown City Developers (Pvt) Ltd. in terms of Clause (9) of the Indenture of Lease No.3992 dated 27th July 2000.

On 17th March 2010 Crown City Developers (Pvt) Ltd. Abans arrogantly resisted stating that they intend utilizing the entire land in the near future to construct a shopping mall and a hyper market and as such no portion of the land will remain unutilized.
On 7th May 2013 a letter was issued by the BOI urging Crown City Developers (Pvt) Ltd. to show cause as to why the Lease Agreement should not be cancelled taking away the unutilized leased area. On 08th May 2013 Crown City Developers (Pvt) Ltd. boldly communicated to the BOI stating that the land is currently being used for parking purposes which is in violation of the purpose for which the supplementary lease agreements were signed by the BOI with so many extensions granted. Crown City Developers (Pvt) Ltd.’s retention of unutilized land has denied providing it to other legitimate investors who have projects which can be economically beneficial to the country. The Company has been resisting to release this land by proposing various development options from time to time.

As the land remained unutilized until March 2015, the BOI issued notice of termination due to non-compliance with the Agreement and the letter of termination was issued on 26th March 2015. As per the general policy mentioned above, BOI takes over lands reserved and allocated for projects but not utilized for the given purpose within a stipulated period of time. The BOI has periodically taken action to cancel projects which have not complied with the agreed terms and conditions of the BOI Agreement irrespective of whether they were located within the BOI Export Processing Zones or outside the Zones. Hence, we reiterate the position there was no political reasons or targeting of any particular company but BOI has acted in a bona fide manner in the best interests of the country. Further, we wish to state that the enjoining order which was issued on 22nd May 2015 has now been vacated by the District Court of Colombo on 5th June 2015.

The manner in which Crown City Developers (Pvt) Ltd. has been accommodated is incomprehensible and illogical. The inconsistent and obscure position of the Company through out a period of 15 years does not stand to reason. The inevitable decision of the BOI canceling the agreement with Crown City Developers (Pvt) Ltd. has been overdue. Consequent to the policy decision taken in February 2015 by BOI to take over lands reserved and allocated for projects but not utilized for the given purpose within a stipulated period of time the following lands were taken back by BOI.

The land was allocated to Crown City Developers (Pvt) Ltd. in the year 2000 and action was taken to take back portion of land unutilized for 15 years. It is significant that lands allocated as recently as 2010 have also been taken back to the BOI when the desired project implementation was not achieved. Example :

Names of Company withheld due to privacy
1. XYZ Company premises at KEPZ [Land in Extent of 3.56 Acres];
2. XYZ Company premises at SEPZ [Land in Extent of 9.33A];
3. XYZ Company premises at WEPZ [Land in Extent of 1.7 Acres]
In addition, action initiated to take over unutilized lands in other Zones such as BEPZ and MEPZ.

In the circumstances it is categorically stated that your news item carried under the heading “Land grabbing – Yahapalanaya style” is totally untrue and contains several malicious statements on several personalities which are defamatory. In the circumstances we shall thank you to publish the statement contained herein giving it the same prominence as given to the impugned news item.

The Editor’s note
We are honored and amused by the length of this response. Honored because the BOI has treated ‘The Nation’ as though it was a court, considering that the original letter sent to us is in the form of a written submission, running to more than 3000 words detailing (selectively, let us add, and as expected from a lawyer who leaves out that which might detract from a client’s plea) by date agreements, incidents etc etc.

The BOI was duly informed that its response is too long and came too late (arriving just before the paper went to print last Friday) to be published. By way of honoring the right to reply, we offer to carry the said ‘written submission’ on our website, www.nation.lk, promising to publish a less-than-1000-word response in the paper the following week. We were being generous since the article referred to was around 800 words and it was not about the BOI alone. Perhaps this is the first time the BOI responded to a newspaper article. Perhaps its newly appointed Chairman, a lawyer by profession, is still finding his feet.

We carried the full response on our website. BOI officials who contacted us and agreed to a 1000 word response, later said ‘The Chairman wants the full response published’. We refused and reiterated our position with respect to what was ‘reasonable length’. Finally the above version was emailed to us.

The news item referred to stated facts. The piece titled ‘Land-grabbing, yahapaalana style’ is a comment, not a news item as asserted by the BOI. It is a pity that the BOI does not know the difference. The BOI has not disputed what’s in the news story titled ‘Abans takes BOI to court’.

BOI talks history, but selectively. There’s no mention of the fact that agreements were amended several times after the period mentioned by the BOI and has remained silent on the developments done by the company on the property in dispute. Assurances and approvals given by the BOI in November 2014 are not referred to either.

The BOI refers to ‘policy decisions’. If this is true it is good. If however this ‘policy’ ends with friends of the Chairman benefitting, it is bad. Time will tell.

We urge the BOI to review its overall policy. We urge the BOI to revisit its mandate and do its own assessment with respect to affirming the same. We urge the BOI to update its website. A 2014 date doesn’t exactly give the impression of a vibrant, ready-to-help, outfit determined to get people to invest in Sri Lanka. That part is not amusing. It worries.